NEW YORK, Oct 25 (Reuters) - A panel of judges explored the
ramifications Thursday of a potential reversal of hedge fund
tycoon Raj Rajaratnam's conviction as they heard arguments on
whether FBI wiretap evidence should have been allowed at his
insider-trading trial.

The 2nd U.S. Circuit Court of Appeals did not indicate how
it might rule on the Galleon Group founder's case. If Rajaratnam
were to win reversal of his 2011 criminal conviction and
sentence, it would be a huge blow to one of the Justice
Department's biggest white-collar crime cases.

Rajaratnam's lawyers argue that investigators intentionally
left out information about their probe from a March 2008
application to a judge to tap the one-time billionaire's cell
phone. They say the decision by a different judge to allow the
tapes to be played at Rajaratnam's trial was wrong.

"What happens if we agree with you, would there be a new
trial?" U.S. Circuit Judge Robert Sack asked Rajaratnam's
lawyer, Patricia Millett, at the start of Thursday's 50-minute
hearing.

Millett responded that the government would have the
opportunity to try Rajaratnam a second time, presenting evidence
other than the phone calls secretly recorded by the FBI over
nine months in 2008.

Rajaratnam, 55, did not attend the hearing. He is serving an
11-year prison term in Massachusetts, one of the longest
sentences imposed for insider trading.
Continued...